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    • littlebranshill
    • By littlebranshill 17th Nov 17, 3:17 PM
    • 18Posts
    • 1Thanks
    littlebranshill
    Inheritance tax avoidance help - who to consult
    • #1
    • 17th Nov 17, 3:17 PM
    Inheritance tax avoidance help - who to consult 17th Nov 17 at 3:17 PM
    I own 2 properties. My husband died 9 years ago and we have no children. Both properties are in my sole name. When I die I am going to be stung for Inheritance Tax. I need help in sorting out what I can do with the properties now to avoid my estate being hammered with 40% tax. Who do I consult? A solicitor doesn't seem to have the information I need and an accountant wouldn't have the necessary legal knowledge. Apart from the 2 houses I don't have any savings so is it just a question of putting the houses in joint names although I have read in another forum that if they are not related to you then the whole of the house comes into the final evaluation. Help please!
Page 2
    • SuperHan
    • By SuperHan 19th Nov 17, 10:17 PM
    • 1,994 Posts
    • 1,161 Thanks
    SuperHan
    A good accountant will certainly have either sufficient legal knowledge or contacts. Equally a STEP qualified lawyer should be qualified for inheritance tax planning, however as an accountant that does a lot of IHT planning, we tend to lead on the tax planning side and instruct lawyers accordingly.

    Who are you planning on leaving your estate to? If you leave it all to charity, there's no IHT to pay...
    • littlebranshill
    • By littlebranshill 20th Nov 17, 1:22 PM
    • 18 Posts
    • 1 Thanks
    littlebranshill
    A good accountant will certainly have either sufficient legal knowledge or contacts. Equally a STEP qualified lawyer should be qualified for inheritance tax planning, however as an accountant that does a lot of IHT planning, we tend to lead on the tax planning side and instruct lawyers accordingly.

    Who are you planning on leaving your estate to? If you leave it all to charity, there's no IHT to pay...
    Originally posted by SuperHan
    I want to leave it to my goddaughter and a friend. Didn't want to leave it to charity.
    • Keep pedalling
    • By Keep pedalling 20th Nov 17, 3:02 PM
    • 4,094 Posts
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    Keep pedalling
    I want to leave it to my goddaughter and a friend. Didn't want to leave it to charity.
    Originally posted by littlebranshill
    Even after tax, they will be receiving considerable sums of money. You should certainly consider making use of of some of it yourself though other wise what is the point of holding considerable wealth just for other people to spend the l it after you have gone.

    If you friend is of similar age to you, it might be worth considering their tax situation, and if your gift would cause them a similar issue.
    • adonis10
    • By adonis10 4th Dec 17, 10:26 AM
    • 1,484 Posts
    • 195 Thanks
    adonis10
    Why do people worry so much about inheritance tax? They certainly won't pay it! Their beneficiaries if non spousal will have have a windfall anyway.
    Originally posted by lincroft1710
    Probably because they would rather not have something (over and above the relevant threshold) that has already been taxed multiple times already throughout their life being taxed again at 40%.
    • Keep pedalling
    • By Keep pedalling 4th Dec 17, 1:35 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling
    Probably because they would rather not have something (over and above the relevant threshold) that has already been taxed multiple times already throughout their life being taxed again at 40%.
    Originally posted by adonis10
    Most ordinary folk only fall into IHT territory because of the escalating value of their home. None of that capital gain has been taxed. Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.
    • kidmugsy
    • By kidmugsy 4th Dec 17, 4:06 PM
    • 9,896 Posts
    • 6,674 Thanks
    kidmugsy
    Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.
    Originally posted by Keep pedalling
    Lucky old you. Ours has all come from taxed earnings.
    Free the dunston one next time too.
    • Keep pedalling
    • By Keep pedalling 4th Dec 17, 4:19 PM
    • 4,094 Posts
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    Keep pedalling
    Lucky old you. Ours has all come from taxed earnings.
    Originally posted by kidmugsy
    I think you will be in the minority there, and it certainly won’t be the same for your beneficiaries who will be receiving a large chunk of unearned income.
    • getmore4less
    • By getmore4less 4th Dec 17, 4:54 PM
    • 30,813 Posts
    • 18,419 Thanks
    getmore4less
    IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.

    That's why 1/2 million people die each year and less than 5% pay any IHT and only 1.25% are over £1m
    40% of the revenue collected is from estates over £2m
    80% of the revenue from over 75's
    60% of the revenue from over 85s

    CGT is another voluntary one but you have to die for that to work.
    Last edited by getmore4less; 04-12-2017 at 5:04 PM.
    • kidmugsy
    • By kidmugsy 4th Dec 17, 5:55 PM
    • 9,896 Posts
    • 6,674 Thanks
    kidmugsy
    IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.
    Originally posted by getmore4less
    OK; tell us how the OP can eliminate it.
    Free the dunston one next time too.
    • Keep pedalling
    • By Keep pedalling 4th Dec 17, 8:51 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling
    OK; tell us how the OP can eliminate it.
    Originally posted by kidmugsy
    With hind site having nearly all your wealth tied up in property makes it pretty tricky, as the best way to eliminate or reduce IHT is to off load a good chunk of it while you are alive, which is not easy to do in chunks with illiquid assets like property. The OP has a double problem in that, he can’t just give the second property away without incurring a CGT liability.

    They could move into the rented property and make a gift their current primary residence, which would avoid the CGT tax issue, and provided they lived another 7 years that would take a large chunk away from their estate, but that could only be done if they are not dependant on the rental to maintain their standard of living.
    • Keep pedalling
    • By Keep pedalling 4th Dec 17, 8:59 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling
    IHT is probably the most voluntary tax payable as with proper planning it can be eliminated.

    That's why 1/2 million people die each year and less than 5% pay any IHT and only 1.25% are over £1m
    40% of the revenue collected is from estates over £2m
    80% of the revenue from over 75's
    60% of the revenue from over 85s

    CGT is another voluntary one but you have to die for that to work.
    Originally posted by getmore4less
    You can save quite a bit during your lifetime making use of your annual allowances and the use of S&Ss ISAs. In the last 5 years we have managed to shift around £80k of gains from our GIA to our ISA accounts and there will be another £20k to shift this year (unless the market crashes before April). All the gains held in ISA accounts are also tax free, unfortunately it is not possible to do these things with property, so yes if property is your thing you have to die to avoide it.
    • getmore4less
    • By getmore4less 5th Dec 17, 7:10 AM
    • 30,813 Posts
    • 18,419 Thanks
    getmore4less
    OK; tell us how the OP can eliminate it.
    Originally posted by kidmugsy
    Sell a house.
    Start spending & giving.

    The OP has said they are asset rich/cash poor but not touched on income or age or how they plan to distribute their estate.

    There will be other options

    if they do have the full transferable nil rate band that's £650 to give out, give the rest to charity.

    ...
    • statex
    • By statex 9th Dec 17, 5:36 PM
    • 38 Posts
    • 21 Thanks
    statex

    Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.
    Originally posted by Keep pedalling

    So you did not pay tax on the money that paid you mortgage.
    • statex
    • By statex 9th Dec 17, 5:46 PM
    • 38 Posts
    • 21 Thanks
    statex
    There is one way to avoid all tax including IHT, CGT and income tax legally.

    Forestry. Investments and income from forests are tax free. The forest has to be commercially managed. Check it out. For instance Terry Wogan had 11 million invested in forests and only paid IHT on the remaining Million.

    An acre of forestry land sells for less that 10K therefore a couple of hundred K can buy you a good size plot. There are several companies that will manage it for you and the costs can be covered by the sale of timber , which is tax free.
    • Keep pedalling
    • By Keep pedalling 9th Dec 17, 8:05 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling
    There is one way to avoid all tax including IHT, CGT and income tax legally.

    Forestry. Investments and income from forests are tax free. The forest has to be commercially managed. Check it out. For instance Terry Wogan had 11 million invested in forests and only paid IHT on the remaining Million.

    An acre of forestry land sells for less that 10K therefore a couple of hundred K can buy you a good size plot. There are several companies that will manage it for you and the costs can be covered by the sale of timber , which is tax free.
    Originally posted by statex
    The OP would have to sell property to buy forestry, so loses rental income and will probably have a tidy CGT liability to meet so probably not that practical.
    • BobDown
    • By BobDown 13th Dec 17, 2:10 PM
    • 7 Posts
    • 2 Thanks
    BobDown
    Why do people worry so much about inheritance tax? They certainly won't pay it! Their beneficiaries if non spousal will have have a windfall anyway.
    Originally posted by lincroft1710
    Because the greedy grabbing government shouldn't be able to take it. Its the principle.
    • BobDown
    • By BobDown 13th Dec 17, 2:17 PM
    • 7 Posts
    • 2 Thanks
    BobDown
    I want to leave it to my goddaughter and a friend. Didn't want to leave it to charity.
    Originally posted by littlebranshill
    Damn right, don't leave it to charity, you want all your money to go where you want it to.
    • Keep pedalling
    • By Keep pedalling 13th Dec 17, 2:39 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling
    Because the greedy grabbing government shouldn't be able to take it. Its the principle.
    Originally posted by BobDown
    So your principle that those lucky enough to inherit considerable sums of money without lifting a finger to earn any of that should get it totally free of tax, while those why have to work to earn every penny of their money have to pay tax on it. That does not seem fair to me.
    • Keep pedalling
    • By Keep pedalling 13th Dec 17, 2:51 PM
    • 4,094 Posts
    • 4,453 Thanks
    Keep pedalling

    Every part of our estate over our nil rate bands has either come through house price increase, capital gains though from investments or inherited money. We have not paid a penny of tax on any of that.
    Originally posted by Keep pedalling

    So you did not pay tax on the money that paid you mortgage.
    Originally posted by statex
    Yes We did, but the value of my house has grown 10 fold over what we paid for it and it is only that uplift in valuation that brings us into IHT territory.

    The nil rate band and primary residents nil rate band mean that we should be able to leave our children £1M tax free, and lifetime PET gifts to get them on the property ladder means they will receive a good deal more than that tax free, they really have little to complain about that anything left over that is going to be subject to tax.
    • adonis10
    • By adonis10 13th Dec 17, 4:08 PM
    • 1,484 Posts
    • 195 Thanks
    adonis10
    So your principle that those lucky enough to inherit considerable sums of money without lifting a finger to earn any of that should get it totally free of tax, while those why have to work to earn every penny of their money have to pay tax on it. That does not seem fair to me.
    Originally posted by Keep pedalling
    And those who don't lift a finger to earn money tend to get everything paid for them, including care which also isn't fair. Life isn't fair, but that is how it is.
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